The Hartford’s 3Q Profit Skyrockets as Prices, Retention Increase

A strong third-quarter performance from The Hartford saw year-over-year profits skyrocket as disaster-related losses fell and the insurer pumped up prices while still improving retention levels.

The Hartford reported net income of $401 million for the quarter, towering above the $60 million in profits the insurer reported in the third quarter last year.

The Hartford’s profits soared for the quarter largely because the insurer saw a shrinking of catastrophe losses, which was a paltry $7 million for the year compared with the $60 million in catastrophe losses that were seen last year.

In the past quarter, the insurance carrier also finalized selling off some of its businesses as it undergoes a restructuring effort. The sale of Individual Life, Retirement Plans and Woodbury Financial Services is expected to net about $2.2 billion in “statutory capital benefit,” CEO Liam McGee said in a statement.

Price, Retention Levels Up

Auto insurance rates for renewing personal policies jumped 4 percent, but the insurer managed to also inflate its retention levels. Retention of auto policies is 85 percent, up 2 percentage points from the third quarter, according to the insurer.

The Hartford is estimating a core earnings outlook of $375 million to $400 million the next quarter, not including the expected losses from Hurricane Sandy, according to the insurer’s third-quarter report.

The Hartford Pitches In for Sandy Relief

During a conference call with investors, McGee said that the insurance provider has not pegged any estimates on the damage wrought by Hurricane Sandy.

The first adjuster from the insurer got to Long Island on Nov. 1, according to McGee.

McGee said that he expected the disaster to present “manageable exposure for The Hartford.”

The insurer announced last week that it is establishing a 60-day grace period in which it will not cancel any policies because of non-payment in disaster-impacted areas.

“Our top priority is to help our customers recover, and we hope this payment relief will provide them with some minor reprieve,” McGee said in a statement.

Other Insurers Also Reported Strong Third Quarters

This quarter has been a bright one for insurance carriers, many of whom dealt with less severe disaster-related losses and reported extremely profitable year-over-year showings for the third quarter. What follows are reports from insurers about their third-quarter profits in 2012 compared with 2011 figures.

—Allstate ($723 million gained compared with $175 million gained)
—Liberty Mutual ($465 million gained compared with $111 million lost)
—Mercury ($66 million gained compared with $3.8 million lost)
—Progressive ($277 million gained compared with $150 million gained)

About Ben Zitney

Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.